Question

The following information is available for Monty Corp. 2017 2016 Current assets $ 48,300 $ 47,850 Total assets 280,000 240,000 Current liabilities 23,000 33,000 Total liabilities 89,600 112,800 Net income 110,250 40,000 Net cash provided by operating activities 90,000 56,000 Preferred dividends 4,000 4,000 Common dividends 2,000 1,000 Expenditures on property, plant, and equipment 28,000 15,000 Shares outstanding at beginning of year 45,000 35,000 Shares outstanding at end of year 80,000 45,000

Answer 1

(a)	Earnings per share=Net income/Weighted average number of shares outstanding
	Weighted average number of shares outstanding=(Shares outstanding at beginning of year+Shares outstanding at end of year)/2
							2017	2016
	Net income					a	110250	40000
	Shares outstanding at beginning of year					b	45000	35000
	Shares outstanding at end of year					c	80000	45000
	Weighted average number of shares outstanding					d=(b+c)/2	62500	40000
	Earnings per share					e=a/d	1.764	1
(b)	Current ratio=Current assets/Current liabilities
							2017	2016
	Current assets						48300	47850
	Current liabilities						23000	33000
	Current ratio						2.1	1.45
	Debt to assets ratio=Total liabilities/Total assets
							2017	2016
	Total liabilities					a	89600	112800
	Total assets					b	280000	240000
	Debt to assets ratio					a/b	0.32	0.47
c)	Free cash flow=Net cash provided by operating activities-Capital expenditures
							2017	2016
	Net cash provided by operating activities					a	90000	56000
	Capital expenditures					b	28000	15000
	Free cash flow						62000	41000